Refer to Figure 13-18. The diagram demonstrates that
A) in the long run, the monopolistic competitor produces the minimum-cost output level, Qa, but in the short run its output of Qb is not cost minimizing.
B) it is possible for a monopolistic competitor to produce the productively efficient output level, Qa, if it is willing to lower its price from Pb to Pa.
C) in the short run, the monopolistic competitor produces an output Qb but in the long run after it adjusts its capacity, it will produce the allocatively efficient output, Qa.
D) it is not possible for a monopolistic competitor to produce the productively efficient output level, Qa, because of product differentiation.
D
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The government of Lithasia has decided to set a minimum price for certain agricultural products in order to safeguard the interests of farmers. This is an example of a ________
A) price floor B) price ceiling C) Pigouvian tax D) Pigouvian subsidy
Refer to Figure 3-2. A decrease in the expected future price of the product would be represented by a movement from
A) A to B. B) B to A. C) S1 to S2. D) S2 to S1.
A supply shock, such as the OPEC oil-price increases in the 1970s,
A) can lead to accelerating inflation, if an accommodation policy tries to maintain the pre-shock level of real GDP. B) will cause lower real wages in long-run equilibrium. C) will reduce the natural level of real GDP. D) both B and C
A firm has to decide between two projects that cost $10,000 each. Project A will provide a revenue $10,700 one year from now, while Project B will provide a revenue of $12,200 two years from now. The interest rate is 10% per year. This firm
A) chooses project A. B) chooses project B. C) rejects both projects. D) is indifferent between projects A and B.